Economy assessment upgraded despite chaos

The government on Thursday upgraded its basic assessment of the economy for the second straight month in June as the weaker yen has helped exports and despite growing uncertainties over the economic outlook due to recent financial market turmoil.

The economy is “picking up steadily,” the Cabinet office said in its monthly economic report for June, making upward revisions to six of the 14 categories, including exports, industrial output, corporate profits and employment.

In the May report, it said the economy is “picking up slowly.”

For June, the Cabinet Office upgraded its assessment of industrial production, saying it is “picking up.”

The government also said exports “show movements of picking up,” and corporate profits are “improving, mainly among manufacturers,” revising upward the two categories for a second consecutive month.

The assessment reflects recent data showing that the economy has been bouncing back in a steady manner.

The economy grew at an annualized rate of 4.1 percent during the first three months of 2013 in inflation-adjusted terms, the fastest rate of gain in a year, buoyed by robust consumer spending and an increase in exports, the Cabinet Office said Monday.

A falling yen usually supports exports by making Japanese products cheaper abroad and raising the value of overseas revenues in yen terms.

With exports recovering and corporate performance improving, industrial production advanced 1.7 percent in April from the previous month for the fifth consecutive monthly rise, the Economy, Trade and Industry Ministry said late last month.

The latest monthly economic report comes amid recent financial market turbulence, with the yen regaining strength after halting slides and the Nikkei stock index falling sharply from its highest level in just under 5½ years logged on May 22.

The Nikkei index briefly fell more than 6 percent in morning trading Thursday, and the dollar, which rose to the upper-¥103 range on May 22 on selling triggered by the BOJ’s aggressive monetary easing steps unveiled in early April, briefly fell to the mid-¥94, also on Thursday.

A Cabinet Office official briefing reporters, however, said the market volatility is “only temporary,” brushing aside concern that it could deteriorate corporate and household sentiment, dragging down business investment and future consumption.